Intellectual Property > IP Newsflash > Delaware Court Finds Discount Redemption Patent Invalid under Alice
21 Jan '16

On January 12, 2016, a District of Delaware judge granted defendant PetSmart’s Rule 12(c) motion for judgment on the pleadings that the asserted patent was invalid under 35 U.S.C. § 101. The asserted claims of U.S. Patent No. 5,612,527 disclose methods for redeeming discount sale offers by associating a machine-readable identification code, such as a barcode, with data stored in a database identifying which items are to be offered at a discounted price.

In framing her analysis under the two-step Alice test, U.S. District Judge Sue Robinson noted that “because computer software comprises a set of instructions, the first step of Alice is, for the most part, a given; i.e., computer-implemented patents generally involve abstract ideas.” And as enunciated by the Federal Circuit in DDR, to satisfy Alice step two the claims must be “directed to a problem specifically arising in the realm of computer technology and the claimed solution [must specify] how computer technology should be manipulated to overcome the problem.” Judge Robinson also noted that, since the Federal Circuit’s DDR ruling in 2014, it has not upheld the validity of any computer-implemented inventions under § 101.

The court held that the claims were invalid under § 101. At Alice step one, the court held that the asserted claims were directed to the patent-ineligible abstract concept of using coupons to provide discounts. Under Alice step two, the court held that the additional limitations in the claims—creating a brochure having a barcode; circulating the brochure to potential users; associating the barcode with a data file listing discounted products; using a barcode scanner to scan the barcode; and using a computer to determine whether the item was on sale and, if so, discounting the price accordingly—did nothing more than recite conventional computer technology, and did not amount to more than the abstract concept itself. Although plaintiff Motivation Innovations argued that the patent contained the inventive concept of using a machine readable identification code to take discount offers and track customer purchasing habits, the court held that this was not an internet- or computer-specific problem, and the patent was not sufficiently specific or narrowly drawn to preclude the preemption that occurs when a “basic building block of human ingenuity” is tied up in a patent.

Motivation Innovations, LLC v. PetSmart, Inc., Civ. No. 13-957-SLR (D. Del. Jan. 12, 2016)